Case Study Description of Baker Hughes: Foreign Corrupt Practices Act
In 2002, Baker Hughes was accused of violating the Foreign Corrupt Practices Act (FCPA). This case describes the actions taken by the company in response to those accusations. These include hiring a third-party law firm to undertake an independent investigation and voluntarily reviewing its entire global operations with the purpose of discovering other FCPA violations. Simultaneously, the company engaged in a comprehensive restructuring of its policies and systems for preventing and detecting the issuance of questionable payments.
Swot Analysis of "Baker Hughes: Foreign Corrupt Practices Act" written by Brian Tayan, David F. Larcker includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fcpa Hughes facing as an external strategic factors. Some of the topics covered in Baker Hughes: Foreign Corrupt Practices Act case study are - Strategic Management Strategies, Ethics, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Baker Hughes: Foreign Corrupt Practices Act casestudy better are - – supply chains are disrupted by pandemic , technology disruption, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Baker Hughes: Foreign Corrupt Practices Act
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Baker Hughes: Foreign Corrupt Practices Act case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fcpa Hughes, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fcpa Hughes operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Baker Hughes: Foreign Corrupt Practices Act can be done for the following purposes –
1. Strategic planning using facts provided in Baker Hughes: Foreign Corrupt Practices Act case study
2. Improving business portfolio management of Fcpa Hughes
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fcpa Hughes
Strengths Baker Hughes: Foreign Corrupt Practices Act | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fcpa Hughes in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study are -
Ability to recruit top talent
– Fcpa Hughes is one of the leading recruiters in the industry. Managers in the Baker Hughes: Foreign Corrupt Practices Act are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Fcpa Hughes has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Fcpa Hughes has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fcpa Hughes to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Finance & Accounting industry
– Baker Hughes: Foreign Corrupt Practices Act firm has clearly differentiated products in the market place. This has enabled Fcpa Hughes to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Fcpa Hughes to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Fcpa Hughes is present in almost all the verticals within the industry. This has provided firm in Baker Hughes: Foreign Corrupt Practices Act case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Operational resilience
– The operational resilience strategy in the Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Organizational Resilience of Fcpa Hughes
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fcpa Hughes does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Fcpa Hughes is one of the most innovative firm in sector. Manager in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Fcpa Hughes are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Fcpa Hughes is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Fcpa Hughes is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Finance & Accounting field
– Fcpa Hughes is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Fcpa Hughes in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Fcpa Hughes digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fcpa Hughes has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Baker Hughes: Foreign Corrupt Practices Act | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Baker Hughes: Foreign Corrupt Practices Act are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Baker Hughes: Foreign Corrupt Practices Act, is just above the industry average. Fcpa Hughes needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fcpa Hughes is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Baker Hughes: Foreign Corrupt Practices Act can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Fcpa Hughes products
– To increase the profitability and margins on the products, Fcpa Hughes needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Fcpa Hughes needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Fcpa Hughes has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Fcpa Hughes supply chain. Even after few cautionary changes mentioned in the HBR case study - Baker Hughes: Foreign Corrupt Practices Act, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fcpa Hughes vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Baker Hughes: Foreign Corrupt Practices Act, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow decision making process
– As mentioned earlier in the report, Fcpa Hughes has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Fcpa Hughes even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Fcpa Hughes has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Fcpa Hughes has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study Baker Hughes: Foreign Corrupt Practices Act that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Baker Hughes: Foreign Corrupt Practices Act can leverage the sales team experience to cultivate customer relationships as Fcpa Hughes is planning to shift buying processes online.
Opportunities Baker Hughes: Foreign Corrupt Practices Act | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Baker Hughes: Foreign Corrupt Practices Act are -
Creating value in data economy
– The success of analytics program of Fcpa Hughes has opened avenues for new revenue streams for the organization in the industry. This can help Fcpa Hughes to build a more holistic ecosystem as suggested in the Baker Hughes: Foreign Corrupt Practices Act case study. Fcpa Hughes can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fcpa Hughes to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fcpa Hughes to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Fcpa Hughes can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fcpa Hughes to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Building a culture of innovation
– managers at Fcpa Hughes can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fcpa Hughes is facing challenges because of the dominance of functional experts in the organization. Baker Hughes: Foreign Corrupt Practices Act case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Fcpa Hughes can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Fcpa Hughes has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Leveraging digital technologies
– Fcpa Hughes can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Fcpa Hughes in the consumer business. Now Fcpa Hughes can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fcpa Hughes can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fcpa Hughes can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Fcpa Hughes to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Baker Hughes: Foreign Corrupt Practices Act External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Baker Hughes: Foreign Corrupt Practices Act are -
Shortening product life cycle
– it is one of the major threat that Fcpa Hughes is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Stagnating economy with rate increase
– Fcpa Hughes can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fcpa Hughes can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fcpa Hughes.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Fcpa Hughes will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fcpa Hughes in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fcpa Hughes with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fcpa Hughes business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Fcpa Hughes needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Technology acceleration in Forth Industrial Revolution
– Fcpa Hughes has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Fcpa Hughes needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fcpa Hughes can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Baker Hughes: Foreign Corrupt Practices Act .
High dependence on third party suppliers
– Fcpa Hughes high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Baker Hughes: Foreign Corrupt Practices Act Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Baker Hughes: Foreign Corrupt Practices Act needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Baker Hughes: Foreign Corrupt Practices Act is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Baker Hughes: Foreign Corrupt Practices Act is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Baker Hughes: Foreign Corrupt Practices Act is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fcpa Hughes needs to make to build a sustainable competitive advantage.